Mexico’s Inflation-Linked Bonds Slump on CPI; Peso Declines

Mexico’s inflation-linked bonds fell, pushing yields to a one-week high, as consumer prices were unchanged in the first two weeks of July.

Yields on Udibonos maturing in December 2014 climbed five basis points, or 0.05 percentage point, to 0.24 percent at 4 p.m. in Mexico City, the highest level on a closing basis since July 12, according to data compiled by Bloomberg.

“Inflation was better than expected,” Agustin Villarreal, a fixed-income director at Invex in Mexico City, said in a telephone interview. “With the inflation data, short-term bonds will obviously have a slight rebound.”

Economists surveyed by Bloomberg had forecast a 0.11 percent increase in the consumer price index. The annual inflation rate slowed to 3.53 percent, within the central bank’s 2 percent to 4 percent target range.

The peso declined 1 percent to 12.6234 per dollar, the biggest drop after the Brazilian real among major Latin American currencies tracked by Bloomberg.

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